BP eyes drilling campaign at Brazil’s pre-salt corner

BP expects oil and gas revenues to be $500 million to $1 billion lower on reduced prices

However, the British major said its oil production was higher in the first quarter

Updates: BP chief executive Murray Auchincloss. Photo: AFP/SCANPIX

Vladimir Afanasiev, European Correspondent, Updated 9 April 2024, 05:14
www.upstreamonline.com/finance/bp-expects-oil-and-gas-revenues-to-be-500-million-to-1-billion-lower-on-reduced-prices/2-1-1623534

UK supermajor BP expects its oil and gas revenues to be around $500 million to $1 billion lower in its first quarter earnings results due to lower realised prices, it said on Tuesday in a trading update.

In the company’s oil production and operations segment, revenues are expected to be lower than in the previous quarter by between $300 million and $600 million. That is mainly caused by price lags on BP’s production in the Gulf of Mexico and the United Arab Emirates and by declines in non-Henry Hub natural gas marker prices.

In the gas and low carbon energy segment, realisations compared to the previous quarter are expected to be hit by around $200 million to $400 million, including declines in non-Henry Hub natural gas marker prices, BP said.

However, the customers and products segment's first quarter result is expected to be helped, compared to the prior quarter, by improving realised refining margins that may result in a benefit of $100 million to $200 million.

The oil trading result is expected to be strong, following a weak performance in the fourth quarter of 2023, BP said.

Higher oil production, but gas just 'slightly higher'

The company reiterated that its oil production was higher in the first quarter of this year against the fourth quarter of 2023. Meanwhile, the growth in natural gas output lagged behind, with production in gas and lower carbon energy just “slightly higher” in the first quarter, according to BP.

The company said its first quarter performance was mostly as it had guided in statements earlier this year, according to its trading and financial update.

BP announced in February that it would release the snapshots of its performance metrics soon after the end of each quarter to “provide investors with up-to-date financial performance insights”.

Refining margins rise from prior quarter

The average refining marker margin averaged $20.60 per barrel in the first quarter compared to $18.50 per barrel in the fourth quarter of 2023, BP said.

Several Ukrainian drone assaults against Russian refineries in March boosted refining margins in Europe and elsewhere – as Russia remained a major supplier of oil products to the global market, despite international sanctions that were introduced after it invaded Ukraine in 2022.

The attacks are estimated to have reduced Russian oil-processing capacity by as much as 14%, according to analysts polled by Reuters, with the country reportedly searching for contracts with neighbours Belarus and Kazakhstan to start imports of fuels later in the second quarter.

The damage to the Russian refineries is not easy to repair as the country previously imported specialised equipment and technology from the US and European providers for produced fuels to meet higher environmental standards.

Meanwhile, international sanctions have prohibited western companies from supplying their equipment to Russia.

BP's improved refining margins were better than it had guided in February, when the company had said it expected "lower industry refining margins with a larger reduction in realised margins" in the first quarter of this year.